Act protecting gas consumers: prices capped for the whole of 2022, compensation for sellers

The act of 26 January 2022 on special solutions for the protection of gas fuel consumers in connection with the situation on the gas market enters into force on 29 January 2022 (Dz.U. 2022, item 202). It protects households and selected institutions from the effects of record gas prices on the wholesale market: in 2022 they pay no more than results from the tariffs approved by the President of URE, and the difference relative to the seller's costs is covered by the state.

What changes

The key provision is Article 10: sellers with an approved tariff must apply it to all protected customers from 1 January to 31 December 2022. The prices are maximum prices, and charges unrelated to the gas fuel may not exceed the level of 1 January 2022. The following are protected:

• households,
• housing communities and housing cooperatives,
• entities supplying gas to dwellings,
• public utility institutions (including healthcare facilities, schools, volunteer fire brigades, non-governmental organisations), after submitting the relevant declarations.

Compensation is paid by Zarządca Rozliczeń S.A. In calculating costs the act assumes a reference price of PLN 310/MWh. Total compensation may not exceed PLN 10 billion; the source is the Price Difference Payment Fund, fed among other things by 40% of revenue from emission allowance auctions in 2022 (up to PLN 6.424 billion) and funds from the COVID-19 Fund. The supplier of last resort and entities with the obligation under Article 49b of the Energy Law may use State Treasury guarantees for loans and bonds – up to PLN 20 billion and PLN 10 billion.

Failure to apply the maximum prices carries a penalty of from PLN 1 million to 15% of the seller's revenue.

Significance for the industry in Poland

For the biogas and biomethane industry the act is a signal that gas prices have become a political topic and security of supply a priority. High gas prices improve the economics of renewable gases relative to fossil fuels, but the price-capping mechanism concerns final customers, not producers of biogas or biomethane. The question remains open of how trade in biomethane, which in Poland does not yet have a legal framework, will be regulated in the future.

For industrial customers the act does not mean protection – their prices are set by the market. This is one of the reasons why people increasingly talk about their own sources of gas, including locally produced biomethane.

The settlement mechanism step by step

The seller submits to the Settlement Administrator (Zarządca Rozliczeń) a monthly application for compensation, in which it compares the actual gas purchase costs with the costs included in the tariff. The difference – within the limits and after verification – is paid within 14 days. After the end of the year an annual settlement follows, and overpayments are subject to repayment. As a result, the whole burden of wholesale price fluctuations falls neither on households nor on sellers, but on the budget and the dedicated fund.

What next

The act provides for compensation to be settled in the following months, with the final settlement in 2023. The government may prepare further solutions if the situation on the gas market worsens. In parallel, the industry expects work to speed up on the amendment to the Act on Renewable Energy Sources, which would open the way for biomethane.